Sun Microsystems has launched a new business unit to sell its Sparc processors, a return to an idea it had dropped years ago. David Yen, currently executive vice president of storage but previously in charge of Sun's Sparc work, will lead the new group and retain his executive VP status, the company said Thursday.

It costs somewhere between 300 and 500 million dollars to do the R&D for a new processor, if you want to stay competitive with Intel.

Intel can afford this because they tend to sell 100s of millions of each new chip so the cost the R&D adds to the part is 3 or 4 dollars.

Sun can't afford to do it because even if they're doing 1/10 of Intel's market share, they have to add 30 or 40 dollars to the price of a chip.

The exact numbers were different 10 years ago when HP got out of the processor business and sold the wide word architecture to Intel as a basis for Itanic, but at that time HP was the #2 computer maker in the world and couldn't make money competing against Intel.

Sun's a much smaller company and has an even worse position with respect to competing with Intel. They're about where Intergraph was in '89, except that unlike Intergraph, they don't have the option of dropping their own processor and going to using Intel, er, wait, they've already started doing that. . .

Sun can't afford to do it because even if they're doing 1/10 of Intel's market share, they have to add 30 or 40 dollars to the price of a chip.

A V890 on the Sun store with 16 cores and 128 GB is over $200K. Do you really think that adding even $1000 to each chip makes a significant difference here?

The thing you do not seem to get is that Sun is not competing with Intel. They are competing with HP and IBM , whose non-x86 prices are similar and quite likely worse.

A HP Integrity 16 core / 128 GB box with top-end Itaniums is easily over $200K, but the dual core Itaniums themselves list (from Intel) at maybe $4K each. HP, of course, charges a lot more than that for each CPU (so much for the benefits of an "industry standard CPU" - last I checked, the price vs PA-RISC was about the same) , but the point is, what does Intel get here, 10, maybe 15 percent of the sale?

Its the system sale that is important.

Besides, if CPU speed was what kept a server company afloat, Alpha would still be here, and Sun would have died 10 years ago.

The thing you do not seem to get is that Sun is not competing with Intel. They are competing with HP and IBM , whose non-x86 prices are similar and quite likely worse.

That's what they all say, just as many companies (like Sun) say they don't compete with Microsoft. HP got rid of their own specialist chips long ago, and IBM has the resources, R and D budget and specific markets (mainframes primarily) to keep Power relevant. Sun has nothing like that to keep SPARC relevant to anyone.

Its the system sale that is important.

Which makes SPARC even less relevant. In that context, it is the chip that costs the least and performs the best that wins out. However, we're talking about the chip business here, and SPARC is just running out of ways to keep itself relevant.

Sun's a much smaller company and has an even worse position with respect to competing with Intel. They're about where Intergraph was in '89, except that unlike Intergraph, they don't have the option of dropping their own processor and going to using Intel, er, wait, they've already started doing that. . .

I don't see how the two compare. Intergraph core business was in the workstation market, not servers and they never designed their own processor line completely in-house. The Clipper processors they used at the time were developed by Fairchild and then the line was bought by Intergraph. The only 100% in-house design they had (the C5) was ultimately axed. On top of that I don't see why Sun couldn't transition to Intel processors. Their newly reborn x86 business is doing very well and suggests the contrary. Their success there was also quite surprising as they entered that very crowded market very late.

I don't see how the two compare. Intergraph core business was in the workstation market, not servers and they never designed their own processor line completely in-house. The Clipper processors they used at the time were developed by Fairchild and then the line was bought by Intergraph. The only 100% in-house design they had (the C5) was ultimately axed.

The C5 wasn't the only completely in-house design. The C300 was designed in-house after the C5 cancelled and was Intergraph's last Clipper based product.

The similarity was that both companies were in the processor design business with far too small budgets and far too small of a chip run to justify the R&D. The C300 was done on 10% of the budget of a typical Intel turn and the corner cutting that required showed up in the product being not competitive.

On top of that I don't see why Sun couldn't transition to Intel processors. Their newly reborn x86 business is doing very well and suggests the contrary. Their success there was also quite surprising as they entered that very crowded market very late.

This is why it would be a mistake to claim that Sun is "dead". They're dying, but something like that might save them. On the other hand, it is a very crowded market and it requires that sun focus on being an integrator rather than a full system developer.

Having watched CDC try to reinvent itself and fail I have significant doubts about Sun.